Section 2(d) and bridging the gap

In the future, if there is any singularity in trademark law, it may well come down to what what is called “bridging the gap” in the Second Circuit. In other words, how much exclusive trademark real estate can you claim beyond what you’re using your (non-“famous”) trademark for right now? Now?

A (current) TTAB Administrative Trademark Judge once said to me that one can predict the outcome of a Section 2(d) case 95% of the time just by looking at the marks and the goods or services. Here are three recent decisions in appeals from Section 2(d) refusals. How do you think these came out? [Answers in first comment].

There are exceptions, of course, just as sometimes the Second Circuit reverses judgments in civil cases not involving big companies. It doesn’t happen all that much, but it happens — as it did just this fall. Back to John:

A divided Board panel reversed a Section 2(d) refusal of MINIBAR SMARTSNAX for packaged snack food “for distribution through refrigerators and food storage cabinets having sensors to detect presence and removal of packages.” The panel majority found no likelihood of confusion with the marks SMART SNACKS for candy and THE SMART SNACK for processed nuts. The judges disagreed as to whether the involved goods travel in different channels of trade and whether purchasers of applicant’s good will exercise more than ordinary care. In re Minibar North America, Inc., Serial No. 87130884 (October 15, 2019) [not precedential] (Opinion by Judge Jyll Taylor). . . .

The panel majority concluded that the similarity between the marks and the identity of the goods were outweighed by the distinct trade channels and the purchaser care vis-a-vis applicant’s goods, and so it reversed the refusal.

Judge Christopher Larkin, in dissent, contended that the panel majority had misapplied the third du Pont factor (trade channels), leading to an incorrect finding under the fourth factor (sophistication of purchasers).

Read that closely: Judge Larkin is saying that misapplication of the third factor led to an incorrect finding under the fourth factor. Let’s dig down a bit. To save you a click, let’s review the LIKELIHOOD OF CONFUSION factors under In re E. I. du Pont de Nemours and Co., 476 F.2d 1357, 177 USPQ 563 (CCPA 1973):

In testing for likelihood of confusion under Sec. 2(d), therefore, the following, when of record, must be considered:

(1) The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation and commercial impression.

(2) The similarity or dissimilarity and nature of the goods or services as described in an application or registration or in connection with which a prior mark is in use.

(3) The similarity or dissimilarity of established, likely-to-continue trade channels.

(4) The conditions under which and buyers to whom sales are made, i. e. “impulse” vs. careful, sophisticated purchasing.

(5) The fame of the prior mark (sales, advertising, length of use).

(6) The number and nature of similar marks in use on similar goods.

(7) The nature and extent of any actual confusion.

(8) The length of time during and conditions under which there has been concurrent use without evidence of actual confusion.

(9) The variety of goods on which a mark is or is not used (house mark, “family” mark, product mark).

(10) The market interface between applicant and the owner of a prior mark:

(a) a mere “consent” to register or use.

(b) agreement provisions designed to preclude confusion, i. e. limitations on continued use of the marks by each party.

(c) assignment of mark, application, registration and good will of the related business.

(d) laches and estoppel attributable to owner of prior mark and indicative of lack of confusion.

(11) The extent to which applicant has a right to exclude others from use of its mark on its goods.

The dissent in In Re Minibar makes it clear that factor (3), similarity of trade channels (present and “likely to continue”), is very likely to affect (4), consumer sophistication, which is the set of people likely to tune into that channel. It would appear, however, that both of these factors, in turn affect at least factor (1) — similarity of the marks “as to appearance, sound, connotation and commercial impression” — and probably factor (2) as well.

Here’s the money graf, which unconsciously (presumably) hints at this in the majority opinion analyzing factor (2), the “similarity or dissimilarity and nature of the goods or services”?

While all of the registrations cover food items, there is no evidence to show that consumers would believe that food items as diverse as cookies and other baked items and meat snacks, on the one hand, are related to nuts and candy on the other. Here a single registration, Reg. No. 4975861 for “nuts and other foods,” does not convince us that the term SMART SNACK(S) is commonly used is the candy and nut industries.

How can these be abstracted from consideration of how who the consumers are and in what settings they are encountering the respective products? Okay, so we agree it’s complicated out there. But here’s the rub: Trade channels evolve, and while trademark bullying is about using economic power and the particular structure of the trademark protection regime to improperly expand trademark protection far outside the actual use or even anticipated use of a mark by its holder, even the duPont factors consider the future, if only in terms of “likely-to-continue” use of a given channel.

The dissent, which to a considerable extent deals with the technical aspects of how to assess the claimed goods and services that are beyond this post (but, of course, deftly summarized by John Welch), nonetheless gets to the point of what to do about what we might call the reasonable future in this point:

On this record, which contains no evidence showing that Applicant’s channels of trade are unusual or unique to Applicant, we may not assume, as the majority does, that only Applicant, and never the Registrants, would sell candy and nuts to “hotels, motels, and temporary stay facilities” for “distribution through refrigerators and food storage cabinets having sensors to detect presence and removal of packages.” Detroit Athletic, 128 USPQ2d at 1052 (finding that it would be improper to assume that the cited registrant, a private social club that owned a registration for various types of clothing that it sold to its members, “will never sell clothing online or through third-party distributors”); see also In re Hester Indus., Inc., 231 USPQ 881, 883 (TTAB 1986) (the “fact that the registrations are currently owned by a retail supermarket chain does not mean that limitations as to channels of trade and classes of purchasers may be read into the registrations when no such limitations are incorporated in the identification of goods.”).

When the unrestricted identifications of goods in the cited registrations are properly given their full scope, the channels of trade for the Registrants’ and Applicant’s legally identical goods are themselves identical in part.

(Emphasis added.) So under duPont, i.e., in the Federal Circuit and hence in the USPTO, we talk about future use of trade channels in terms of “limitations” suggested or implied in the description of goods and services. But as the quote from Detroit Athletic makes clear, this concept does not really fall so far from bridging the gap, notwithstanding that it is set out as its own “factor” and is much more explicit:

(4) evidence that the senior user may “bridge the gap” by developing a product for sale in the market of the alleged infringer’s product;

Question number one, focusing on the “real” complaint here, namely the one originally styled as an opposition by the dairy Land O’ Lakes: Is there a “classic” trademark infringement claim here? No, says the court, for two reasons (emphasis added):

We’re puzzled that the dairy company should have been worried by Hugunin’s use of the same trademark. Though besides sponsoring the fishing tournament the company has advertised in fishing magazines and made other appeals to fishermen to buy its dairy products, it neither makes nor sells any devices or materials used in fishing (such as hooks, lines, sinkers, floats, rods, reels, baits, lures, spears, nets, gaffs, traps, waders, and tackle boxes—compendiously, fishing tackle)—any products, therefore, that might be confused with Hugunin’s fishing tackle. It would be strange indeed for a dairy company to manufacture a product so remote from milk, butter, and cream, and there is no sign that the dairy company intends to take the plunge.

The court here makes two determinations, one of which strikes me as particularly notable, though it’s not the main point of this post. The first is that, unsurprisingly, there is no LIKELIHOOD OF CONFUSION between the two companies’ respective lines of goods. Fair enough.

The second, more interestingly — though under the facts of this case, not at all novel — is last phrase, “there is no sign that the dairy company intends to take the plunge.” I’m not that impressed with the pun, because all smart, confident people make puns, but rather the Seventh Circuit’s employment here of a standard for LIKELIHOOD OF CONFUSION not found in its usual recitation of factors. It’s something we in the Second Circuit call “(4) evidence that the senior user may ‘bridge the gap’” — i.e., between its present goods and services and those of the junior user — “by developing a product for sale in the market of the alleged infringer’s product,” as set out in Polaroid Corp. v. Polarad Electronics, Corp., 287 F.2d 492 (2d Cir. 1961). Or, as we say in the Third Circuit, “factors suggesting that the consuming public might . . . expect that the prior owner is likely to expand into the defendant’s market” under Interpace Corporation v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983).

You won’t find “bridging the gap” as a factor listed in Seventh Circuit cases such as Sullivan v. CBS Corp., 385 F.3d 772 (7th Cir. 2004) or others that set out the longstanding test for LOC in the Seventh. Of course, it is a pretty common criterion for infringement, and a logical one — see here (I did look around to see if there’s been anything new, though not extensively). Hugunin may be the first Seventh Circuit opinion to endorse this criterion for infringement explicitly. I digressed here, but you will understand that I am likely to be distracted by LIKELIHOOD OF CONFUSION tests.

The takeaway is, as the dissent in In re Minibar seems to be saying, while trademark rights (and hence the rights protected by a registration) are undeniably limited to the here and now use of a mark, a zone of likely expansion must be considered — short of granting a right in gross and treating all trademarks as “famous” per the meaning of that word under federal dilution.

In the Federal Circuit under duPont, this future expansion may be more limited, perhaps only to expansion of channels of trade. In the Second Circuit, and others, it is surely beyond that — but there is a limit. As Scott Hervey explains, in a blog post discussing the issue of bridging the gap, or what the Ninth Circuit calls “(8) likelihood of expansion of the product lines”:

So, how does a plaintiff establish that it has a legitimate business interest in expanding the use of its mark to the new line of product then being sold by the defendant? The possibility of expansion can not be merely theoretical; their must be a solid plan in place or action taken which shows that expansion will occur in the very near future. In M2 Software, Inc. v. Madacy Entertainment, the 9th Circuit stated that there needs to be a “strong possibility of expansion into competing markets.”

In M2 Software the court was to consider whether Madacy’s use of the trademark M2 ENTERTAINMENT for a record label that sold full-priced CDs featuring a line of sports-related music infringed M2 Software’s M2 trademark for computer software featuring business management applications for the film and music industries.

There is no doubt that, garbagio goods aside, in an all-licensing, all-the-time branding world, trademark registrations can, do and must be filed for all the trinkets, knick-knacks and other non-source-related brand extensions a markholder wants to protect (especially overseas, of course). The question is more dicely when we ask if sneakers logically expand into other athletic wear or housewares logically expand into tableware or — you get the picture.

And it is a bit troubling that there are distinctions (and there are) across the federal circuits on this issue, because, again, given the ubiquity of licensing and extension of successful brands across categories near and far, this is going to be a big thing. These distinctions may be shrouded versions of the question, “How do you prove your mark was going there?” Or they may be substantive. Either was, it matters, and it is going to matter more.

Should the courts bridge this gap, or is that a job for Congress? Keep in mind that the respective circuits’ “tests” for LIKELIHOOD OF CONFUSION are almost all found in cases that are decades old. Heck, the Second Circuit’s Polaroid test was decided in 1961, which makes it older than LIKELIHOOD OF CONFUSION — not the blog, the blogger. (Okay, not every blogger, but you get the point.) And despite reading bridging the gap into the Seventh Circuit’s LOC factors in Land O’Lakes, the Seventh Circuit didn’t acknowledge its existence by restating its LOC test as one that includes bridging the gap. And your blogger here (the young, vital one) is telling you that this is going to be a thing. So what’s going to be?

Answer: It’s a job for Congress. We have presented here what is a policy question, whose answer is properly considered and analyzed bloodlessly by the legislature in light of the changes in the commercial landscape, based on testimony by seasoned experts and a non-partisan evaluation of what policy would best effectuate public policy.

In other words, Congress will never act. So if there is ever harmonization on this issue, it will likely come about in a decision by the Supreme Court, for better or for worse. Don’t jump!!

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The Title, the Blog and the Blogger

The question of whether consumers are likely to be confused is the signal inquiry that determines if a trademark infringement claim is valid. I write here about trademark law, copyright law, brands, free speech (mostly as it relates to the Internet) and legal issues related to blogging. That may sound like a lot, but it's just a blog.

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